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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






2. Entry of new firms shifts the cost curves for all firms upward






3. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






4. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






5. AVC = TVC/Q






6. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






7. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






8. Occurs when LRAC is constant over a variety of plant sizes






9. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






10. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






11. The difference between total revenue and total explicit and implicit costs






12. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






13. The additional benefit received from the consumption of the next unit of a good or service






14. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






15. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






16. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






17. All firms maximize profit by producing where MR = MC






18. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






19. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






20. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






21. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






22. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






23. Entry (or exit) of firms does not shift the cost curves of firms in the industry






24. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






25. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






26. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






27. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






28. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






29. MUx / Px = MUy/Py or MUx/MUy = Px/Py






30. Total product divided by labor employed. APL = TPL/L






31. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






32. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






33. Models where firms are competitive rivals seeking to gain at the expense of their rivals






34. The lost net benefit to society caused by a movement away from the competitive market equilibrium






35. A good for which higher income decreases demand






36. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






37. Exists if a producer can produce a good at lower opportunity cost than all other producers






38. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






39. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






40. Ei = (%dQd good X)/(%d Income)






41. The most desirable alternative given up as the result of a decision






42. A firm that has market power in the factor market (a wage-setter)






43. The sum of consumer surplus and producer surplus






44. The rational decision maker chooses an action if MB = MC






45. The difference between total revenue and total explicit costs






46. Two goods are consumer substitutes if they provide essentially the same utility to consumers






47. The marginal utility from consumption of more and more of that item falls over time






48. Exists at the point where the quantity supplied equals the quantity demanded






49. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






50. Product demand - productivity - prices of other resources - and complementary resources